IRS to hire private tax-collection firms

The Internal Revenue Service announced Sept. 26 that it will hire four private agencies to begin collecting certain overdue federal tax debts starting next spring.

The private tax-collection program was authorized by Congress last December when a provision requiring the IRS to outsource tax collection was included in a highway bill to offset the cost of the legislation.

“These private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working their accounts,” the agency said in an announcement. “Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases. The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer.”

IRS said employees of the private collection agencies must comply with the Fair Debt Collection Practices Act and “be courteous and respect taxpayer rights.”

The National Treasury Employees Union immediately blasted the plan, saying IRS instead should retrain thousands of its own employees who are scheduled to be laid off, rather than outsource the tax-collection work to “unaccountable private companies.” The union said two previous attempts to use private collectors failed.

According to NTEU, more than 7,000 IRS employees are slated to lose their jobs at sites that process paper tax returns — 1,800 in Covington, Ky./Cincinnati, Ohio, in 2019; 3,000 in Fresno, Calif., in 2021; and 2,400 in Austin, Texas, in 2024.

“Many of these workers have been loyal employees of the IRS for decades but only some of them will get other jobs within the agency,” said NTEU National President Tony Reardon. “The smart and humane thing to do would be to retrain the remaining workers to collect delinquent taxes rather than outsourcing IRS jobs. There’s absolutely no need for Congress to outsource this important work to the most complained about industry in America when there’s more than enough in-house talent available.”

Amid an increase of scams by fraudsters impersonating IRS tax collectors, IRS said it “will do everything it can to help taxpayers avoid confusion.”

Reader comments

Tue, Sep 27, 2016

I would consider this function of the IRS to be Inherently Governmental, and therefore not available for public collection agencies. I agree with NTEU, train current IRS Employees to perform this function. No Outsourcing needed.

Tue, Sep 27, 2016

IRS said it “will do everything it can to help taxpayers avoid confusion.” This will MOST definitely cause confusion to the taxpaying public - bad idea.

Tue, Sep 27, 2016 Julie

Just another example of how the government goes round and round in circles. This was tried before and it failed. So who wants to bet on how long this attempt will last? What a waste of the IRS resources that will have to be devoted to monitoring this program!!

Tue, Sep 27, 2016 Anne Michigan

What a bunch of BS! We file taxes w/the under-standing our info is PRIVATE/CONFIDENTIAL and with all the gov. hacking and now phone collectors that may(or MAY NOT) "follow the rules," confusing folks even more. T/Ps don't need this new problem! IRS needs to get THEIR COLLECTION department in shape and quit passing stuff off to outside contractors!

Tue, Sep 27, 2016

This failed under Clinton & Bush 2 at a cost to us taxpayers of MILLIONS of $$$, yet Congress was stupid enough to pass this. I wonder how much it will cost us this time. It is asking for abuse, waste, & fraud.

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